TUCSON, Ariz. -- Across Tucson, Ariz., the gas station industry is going through a "shakeout," reported The Arizona Daily Star. About two dozen stations have closed since the beginning of 2010. Owners cited a variety of factors, including the arrival of QuikTrip to the market. The Tulsa, Okla.-based company opened its first Tucson-area store in January 2010 and has put up 12 more since. Another three are under construction.
Robert Mahlstede, who was the president of Loma Catalina Co., which ran the 17-store local Catalina Mart chain until selling to El Paso, Texas-based Western Refining Inc. last June (see Related Content below for previousCSP Daily News coverage), offered insight into QuikTrip's success. He told the newspaper that Tucson stations have traditionally sold an average of 80,000 gallons per month. QuikTrip, he said, aims to sell 350,000 gallons a month at each station.
One advantage QuikTrip has is that it has the wherewithal to lose money on new stations while it builds up its market share and tries to reach that 350,000 gallon mark, Mahlstede speculated.
"They're not building a station in order to capture new market," said Mahlstede. "They're clearly and totally coming in to take share away from someone else," he told the newspaper.
"They've got the wherewithal to build multi-million dollar stores. They've got the ability to build many at one time. They've got the ability to perhaps lose money for a time. In the meantime, they put the smaller independent people out of business," Troy Little, president of 26-store local chain Quik Mart, told the paper.
QuikTrip spokesperson Mike Thornbrugh credited his company's success in Tucson to superior hiring and customer service. "We hire better than anyone. We train our employees better than anyone. And our benefits are better than anyone," he told the Star. "We're really, really sticklers on consistency. That means, not only the look of the building, the merchandise, the pricing. Throughout the course of the day, everyone knows what they're doing at every location, and it won't vary."
He added, "We're coming in with a new prototype. We never stand still. We're always looking for a way to better or enhance ourselves."
He acknowledged competing unsuccessfully with QuikTrip. "I think we operated some pretty nice units and hired good people and kept them clean," Mahlstede said. "They just kicked our butt."
QuikTrip's success has prompted competitor Circle K into a cycle of building and updating, said the report.
Independent stations also were having trouble competing with discount-priced fuel being sold by other retailers, including supermarkets, Jesse Lugo, a former Tucson station owner, told the paper. Many have closed and remain vacant.
Tom Cooley retired and closed his independent station, C&T Oil, on April 16, said the report. "It's just so competitive. ... Circle K is building like crazy, and so is QuikTrip," he told the paper.
He added that credit-card company fees also ate into already-narrow profit margins.
Another factor, according to Mahlstede, is the desire of oil refiners to keep their refineries running at high capacity. The difference between running a refinery at 98% of capacity and 92% can be the difference between making big profits and just breaking even, he said.
"Western's not necessarily doing it to make any money at the gas station. They're just keeping their refinery going," he claimed.
That allows them to keep gasoline prices lower at the pump than independent retailers could, said the report.
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